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Building Regulatory Bodies in the Brazilian States


Why do some bureaucratic bodies become robust after they are created, with adequate resources and authority to perform their tasks, while others remain underfunded and limited in scope? My dissertation explores this question using multisector regulatory agencies in Brazil. Before, during, and after the development of concessions and transfer of essential services to private control in Brazil, state governments created regulatory agencies to maintain an active state role overseeing of service delivery. Though regulatory agencies followed very similar formal outlines, their post-creation development varied widely. I explain this variation.

My arguments are based in political principals' electoral incentives. I begin with an instrumental explanation of agency creation. Governors created regulatory agencies to address a combination of consumer and concessionaire anxiety where they were unable to otherwise make long-term commitments to prevent abusive price increases or expropriation. I then argue that post-creation development was most pronounced where multisector bodies focused most heavily on work in electrical energy, sanitation, and piped natural gas distribution. Mayors and city councilmembers can claim credit for service improvements in these policy areas because these services are geographically bounded. By contrast, work in intercity highways and transportation provides few opportunities for improvement for which local officials can claim credit. Agencies focused on these second set of issues do not develop a positive reputation with mayors. Governors in turn care about mayors' opinions, and receive credible information about bureaucratic work from them, because mayors' support is key in future statewide elections. Agency leaders who employ their positive reputation to successfully lobby for more resources and authority produce robust agencies.

I explore this argument in multiple areas. First, I explain the workings of the proposed causal mechanism through a comparison between the agency Agergs in moderately well-developed state of Rio Grande do Sul and the agency Arce in the less-developed state of Ceará. Agergs's early focus on highway and transportation regulation meant that it grew far less robust by 2010 than did Arce, which focused on electricity and sanitation. I then test hypotheses across the case universe using descriptive statistics and causal process-tracing. I expand the argument slightly to examine sectoral agencies in São Paulo and Rio de Janeiro, and hypothesize how different political institutions might affect subnational regulatory body development in Argentina and Mexico, the next-largest Latin American federations.

My work contributes to our understanding of the functioning of the regulatory state in the global South. I raise new important questions about local state capacity in developing countries, and propose an explanation that can be transferred to multiple cases.

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